In the Eurozone, activity picked up by 0.3% in Q4 2014, after moderately expanding
in Q3 (+0.2%). The recovery in
production is expected to continue. GDP is to slightly accelerate in Q1 2015 (+0.4%)
and then continue to expand at the
same rate over the following quarters. The driving forces of the upturn will be a
significant pick up in net exports and a
robust growth of private consumption over the forecast horizon, driven by weaker energy
prices. Labour market
conditions will continue improving, boosting marginally real disposable income and
private consumption. Easing of credit
conditions, improving prospects for internal demand and the need to replace an ageing
capital stock will lead to a modest
investment speedup in the first three quarters of 2015, from +0.1% in Q4 2014 to +0.5%
in Q3 2015. Under the
assumption that Brent oil price remains stable at 56 USD per barrel and the Euro/Dollar
exchange rate fluctuates around
1.10, inflation is expected to fall to -0.3% in Q1 2015. This drop reflects diminishing
pressures from global commodity
prices and weaker energy prices, but also still low prospects for core inflation.
Inflation is to be broadly stable in Q2 and
Q3. This forecast assumes that an agreement between Greece and its creditors will
preserve the Eurozone currency bloc
stability but the outlook would otherwise be grimmer. On the positive side, the ECB’s
QE may have larger effect on
investment growth than supposed in this forecast.